Assessing your optimal endgame strategy

For many defined benefit pension schemes, the traditional endgame assumption has been to buyout as soon as it becomes affordable.

But the market has changed. Improved funding levels, new legislation and a broader range of endgame options mean trustees and sponsors now need to ask a different question: which route delivers the best long-term outcome for the scheme?

Could running on create better outcomes for your DB scheme?

Our latest briefing explores whether running on for a period before buyout could create greater value for some schemes – and what trustees and sponsors should consider when assessing their options.

What the briefing covers

The briefing draws on modelling across a wide range of schemes, including analysis of how scheme size, maturity, investment approach, running costs and projected cashflows influence the optimal endgame route.

It explores:

• How the DB endgame market is changing
• When run-on may create more value than immediate buyout
• How optimal run-on periods vary by scheme size and maturity
• How much surplus could potentially be shared with sponsors and members
• Why operational efficiency is central to preserving value
• The importance of data, administration and governance in preparing for endgame

Why this matters

For some schemes, buyout or another form of risk transfer will remain the most effective route. For others, particularly larger schemes with the right maturity profile and operational set-up, a carefully managed run-on strategy could deliver a stronger economic outcome.

However, capturing that value depends on more than funding. Good data, efficient processes, clear governance and joined-up advice are all essential to making an endgame strategy work in practice.

Every scheme is different. The right route will depend on your funding position, maturity, sponsor objectives, risk appetite and operational readiness.